Down but not out

Whichever way you slice it, the last 12 months have not been kind to PC giant Dell.

The vendor, famously founded by the eponymous Michael Dell in his Texas dorm room nearly 30 years ago, in 2013 laboured through what Forbes described as “the nastiest tech buyout ever”, while seeing its market share slump and its profits dwindle.

For Dell’s Europe, Middle East and Africa (EMEA) president, however, there is a light at the end of the tunnel. In an interview with Arabian Business, Aongus Hegarty explains that the company is midway through its transition from a PC builder to a provider of “end-to-end solutions” that encompasses mobile devices, security, software and data centre services. In theory, the move will not only create new, more lucrative revenue streams for Dell, but allow it to better compete with industry titans such as IBM, Hewlett-Packard and Oracle.

Hegarty is the first to admit that Dell’s evolution has been a challenging one and, to a degree, has been exacerbated by some of the recent trends that have swept the industry, such as the shift from desktop PCs to mobile devices and the push towards cloud computing.

“Our market, the technology industry in a broader sense, is constantly going through transformation and change,” he points out.

That is one way of putting it. According to the latest third-quarter figures from IT industry watcher International Data Corporation (IDC), the global PC market is shrinking at a startling clip, with overall shipments down by 7.6 percent to just 81.6m units.

To make matters worse, Dell is also losing in this space, with its market share trailing behind Hewlett-Packard and China’s Lenovo.

Despite the grim reading, Hegarty attempts to remain upbeat. “Yes, PCs in their current period are slowing down. That said, there’s hundreds of millions of PCs shipping ongoing on a quarterly basis and annually, so there’s still a significant market for PCs. It’s not as large as it was last year, and it’s declined on a year-on-year basis,” he says.

Industry analysts have offered various theories for what appears to be a terminal decline in the desktop PC market, ranging from a broader move towards mobile devices such as tablets and smartphones, to customers delaying investments due to the perceived unpopularity of Microsoft’s new operating software Windows 8.

Either way, the trend is a worrying one for Texas-based Dell, which, of its $14.5bn in quarterly revenue, derives fully $9bn from its end-user computing division, which produces its desktop and laptop computers.